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Finnfund launches €100m green bond with Jefferies acting as lead manager

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Published: 29 January 2024

The Finnish development financier and catalytic impact investor is aiming to fund 50% of its investments with private capital by 2030.

Finnfund’s green bond is the first ever green transaction under its Sustainability Bond Framework | Arthon Meekodong on Unsplash

Finnfund, a Finnish development financier and impact investor, has issued a €100m green bond, representing the firm’s first ever green transaction and second issuance under its Sustainability Bond Framework established in September 2022.

Proceeds from the issue will be used in accordance with the green project categories of the framework, to finance and refinance eligible green lending, equity investments and mezzanine financing. The focus will be on targeting climate change mitigation, adaptation, or environmentally sustainable management of living natural resources.

The new bond is hoped to contribute to Finnfund’s goal to foster sustainable development by providing investment opportunities for private investors. 

Mobilising capital

Finnfund adopted a strategy in January 2022, setting a target to fund 50% of its investments with private capital by 2030. Mobilising private capital is key to achieving the UN Sustainable Development Goals in developing countries, given that the UN estimates the financing gap at $2.5trn per year.

Additionally, the 10-year bond bears interest at the rate of 3.5% per annum. The bond offering was placed to international investors, including a portion of dedicated green bond investors and portfolios.  Jefferies acted as the sole arranger and lead manager in connection with the issue of the bond.

Jaakko Kangasniemi, managing director, CEO at Finnfund, said: “Sustainable, innovative businesses and investors play an integral role in solving both global and local challenges, such as climate change mitigation and adaptation, and biodiversity loss. Capital markets are also vital in the transition away from fossil fuels.”

Net proceeds will be allocated to eligible projects with the objective to mobilise debt capital to support Finnfund’s mission to generate lasting impact by investing in businesses that solve global development challenges.

Andrey Medvedev, senior vice president at Jefferies said: “We are delighted to have assisted Finnfund issuing its longest private placement to date and showcasing its innovative green projects. This deal demonstrates Finnfund’s appeal to a diversified international investor base and cements its position as a leading development financing agency.”

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